China Autos & Shared Mobility_ Renewed promotions in February…likely not even the beginning of the end

Summary of Key Points from the Conference Call Industry Overview - Industry: China Autos & Shared Mobility - Date: February 10, 2025 - Market Context: Overall January sales were better than expected due to trade-in subsidy extensions, but most electric vehicle (EV) manufacturers have extended or increased promotions to secure orders during the low season in Q1 [1][5] Company-Specific Insights BYD - Price Trends: January blended price decreased by 0.5% month-over-month (MoM) with discounts slightly down by 0-1% [2] - Promotions: Continued offering trade-in subsidies of Rmb6-8k and Rmb5k insurance subsidies [2] - Future Strategy: Upcoming smart driving strategy to be unveiled, with potential L2+ NOA features in new models [2] - Key Questions: 1. Will highway NOA be standard across all models or limited to mid/high-end editions? 2. Expected price gap between new and legacy models is speculated to be Rmb5-10k. 3. Will there be official price cuts on legacy models to boost Q1 sales? [2] Li Auto - Price Stability: Blended prices remained steady MoM in January, with non-cash incentives increasing in February [3] - Promotions: Offering an additional Rmb6-8k replacement subsidy across all models [3] - Market Sentiment: January sales were lackluster, supporting bearish market views that further discounts may be forthcoming [3] NIO - Price Stability: Retail prices were largely steady MoM in January, with increased non-cash incentives in February [3] - Promotions: Offering Rmb10k cash subsidies and additional BaaS vouchers, with a reduction in spec upgrade subsidies [3] XPeng - Price Trends: Blended prices fell by 2% MoM, with specific models seeing price reductions of 2-6% [4] - Promotions: Introduced a 0% interest rate and 0% down payment campaign for certain models [4] Market Dynamics - Discount Trends: Anticipation that discounts will persist or worsen in the coming weeks as OEMs aim to reduce inventory ahead of new model launches in March/April [5] - Competition: Monitoring local players' adoption of L2+ NOA in the mass market segment, which could introduce new competition in 2025 [5] - Upcoming Launches: Pricing strategies for new models from Tesla, AITO, Xiaomi, BYD, Denza, and XPeng are under observation [5] Promotional Changes Summary - Tesla: Introduced an Rmb8k insurance subsidy for Model 3 and a 0% interest rate [9] - Xiaomi: No changes in promotions [9] - Li Auto: New local subsidies and financing promotions introduced [9] - NIO: Adjusted subsidy structure and increased BaaS vouchers [9] - XPeng: Launched a 0% interest rate and down payment campaign [9] - BYD: Continued existing discounts without changes [9] Conclusion - The Chinese auto market, particularly in the EV segment, is experiencing aggressive promotional strategies as companies navigate a low sales season. The focus on subsidies and pricing adjustments indicates a competitive landscape as manufacturers prepare for new model launches and seek to maintain market share.